Sustainable manufacturing is not a new concept, but it is one that is becoming more important as many countries pledge to reduce C02 emissions and introduce carbon taxes.
What is Sustainable Manufacturing?
Sustainable manufacturing is, as per the US Environmental Protection Agency: manufacturing products through processes that minimize negative environmental impacts while conserving energy and natural resources. Sustainable manufacturing also enhances employee, community and product safety.
Below shows Canada’s expected emission reductions per sector by 2030. One of the largest reductions is from Future Reductions which includes efforts from companies becoming more sustainable.
* Future Reductions:
- Efforts to increase clean electricity, greener buildings and communities, electrification of transportation and nature-based climate solutions.
- Greater than anticipated clean technology adoption; one possible scenario is highlighted in the Technology Case, as set out in Canada’s Fourth Biennial Report on Climate Change.
Information sourced from the Government of Canada
Many Canadian companies are already making the switch to more sustainable manufacturing including the following few:
Canada Goose
Become net zero by 2025
By 2022 end the purchase of new fur and use reclaimed fur
Eliminate single-use plastics in all Canada Goose owned or controlled facilities
Rio Tinto, Geocycle Canada and Lafarge Canada
Working to reuse waste from aluminium smelting process to make cement
TC Energy
Starting construction in 2021 on NOVA Gas Transmission, which is helping the switch from coal to natural gas
Benefits
Sustainable manufacturing can benefit a company in more ways than just becoming green and helping the environment. Becoming sustainable can allow for reduced costs, increased profit margin and the potential to attract new customers.
““We’ve moved past this concept that business versus the environment is a trade-off,” “The business benefits were always there, but more and more companies are going after them.””
Reduced Costs
At first, becoming more sustainable will mostly cost more money up front but as the years go by the investments tend to pay themselves off. Many governments also offer tax benefits to businesses who become more sustainable, helping offset the initial cost of making the switch to being more sustainable. The Government of Canada allows companies to write off up 50 per cent of eligible sustainable equipment per year on a declining balance basis.
Switching to more sustainable manufacturing will help reduce overall costs of running operations. For example, something as easy as changing all the lights to LED light bulbs can help reduce energy bills. Reducing the use of fossil fuels and switching to more renewable energy can help reduce the carbon footprint and therefore potentially reducing carbon taxes for the company.
New Customers
Consumers today are actively seeking out companies that are more sustainable to buy from. A report from Nucleus Research suggest that as of 2019, people are 63 per cent more likely to buy products from companies that are sustainable. These same people are also willing to pay up to six per cent more for products that come from a sustainable company.
Millennials and Gen Z are two generations that prefer to buy from sustainable companies. 73 per cent of Millennials said they are more likely to support sustainable companies. With a buying power of over $140 billion USD, 93 per cent of Gen Z said they would rather buy from a sustainable company. To help attract these new customers, publishing Corporate Social Responsibility reports and advertising being sustainable is key.
The chart below highlights the average amount of transactions per generation and the average cost per transaction. With Gen Z spending the most at an average of almost $21,000 per person per year.
Increased Profit Margin
Decreased overhead due to becoming more sustainable can lead to increased profit margin. Another way sustainability can help increase profit margin is the reduced waste being produced and less money being used to deal with the waste. Profit margin can also be increased due to the new customers that have been attracted and the potential increase in price these customers are willing to pay.
How to Become More Sustainable
Becoming more sustainable can start small, but there are also some bigger ways to become more sustainable such as reducing waste and using more renewable energy.
Waste Mitigation
Waste mitigation includes reducing or eliminating harmful products such as emissions and toxic by-products that may be produced in the manufacturing process. The manufacturing industry has potential to recycle its own by-products to help reduce waste.
Panasonic is implementing a waste management process to recycle its sludge into dehydrated powered sludge that can be recycled to cement companies.
Switch to Renewable Energy
There are a few different ways to make the switch to renewable energy sources in manufacturing. One way is making the switch from gas and diesel engines to electric motors, read more about the switch here. Another way to switch to renewable energy is to use more solar or wind power to help run the operation in regions where these renewable energy sources are feasible.
An example of saving money when switching to more renewable energy is Procter & Gamble (P&G). In 2015 P&G built a wind farm in Texas that offsets 100 per cent of the electricity needed for P&G’s Fabric and Home Care facilities in both Canada and the US.
Conclusion
Overall, there are many benefits to becoming more sustainable, the main one being the ability to increase profit margin by decreasing overhead and increasing customers. Though switching to a more sustainable practice may take some time and money, in the end the benefits outweigh the cost.
